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    Carlson3's Avatar
    Carlson3 Posts: 1, Reputation: 1
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    #1

    Sep 5, 2010, 03:13 PM
    Accounting- Adjusting entry
    A lawsuit is filed against a company in December of the current year. An outside legal counsel advises that a loss of $45,000 is likely. What would the adjusting entry look like?

    There would be an increase in liabilities so a credit to the "Estimated Legal Liability Account", but what account would you debit for $45,000?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Sep 5, 2010, 04:42 PM

    Some type of loss - you don't need to get picky about the name. Like Litigation Loss or some such.
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